With so many mutual fund houses launching new fund offers (NFOs) every month and the old ones plying in the market to create wealth, many old and new investors are eager to know which of them can help them create wealth. Of course, there are some of the best-performing mutual funds that have earned returns to investors beyond anticipation. Though past returns are not and should not be deemed as the benchmark for future returns, they say a lot about fund performance and why mutual funds offering high returns at low expense ratios are always preferred over their peers.
Mutual fund investors prefer to categorise their investments under different market capitalisations, starting with large-cap funds and then moving on to mid-cap funds and finally trickling down to small-cap funds, value funds, focused funds, and so on. The reasons may be myriad, though the most common reason is that large-cap funds promise good returns and are comparatively less volatile.
The following illustration highlights some of the large-cap funds that have helped investors not only beat inflation but also create wealth in the long run.
Large-cap funds | 10-year returns (in %) |
| Nippon India Large Cap Fund | 17.94 |
| Mirae Asset Large Cap Fund | 17.77 |
| SBI Blue Chip Fund | 16.52 |
ICICI Prudential Bluechip Fund | 16.05 |
Baroda BNP Paribas Large Cap Fund | 15.90 |
Kotak Bluechip Fund | 15.80 |
HDFC Top 100 Fund | 15.71 |
| Source: AMFI (As of October 16, 2023) |
A little bit of risk is what it takes to earn more returns, thus, helping most investors reach their financial goals in time. While many investors putting money in mutual funds have a long-term investment horizon spanning over two decades or more, considerably higher returns have helped many of them earn money considerably faster than planned.
The following table shows how some mid-cap funds have delivered high returns over the past 10 years and continue to perform well with equal gusto.
Mid-cap funds | 10-year returns (in %) |
| Kotak Emerging Equity Fund | 24.79 |
| Edelweiss Mid Cap Fund | 23.56 |
HDFC Mid-Cap Opportunities Fund | 23.20 |
Invesco India Mid Cap Fund | 23.02 |
SBI Magnum Midcap Fund | 22.56 |
UTI Mid Cap Fund | 22.20 |
Tata Mid Cap Growth Fund | 22.16 |
| Source: AMFI (As of October 16, 2023) |
Small-cap funds are the real deal breakers. Investing in small-cap funds is crucial for achieving alpha, given their focus on high-growth companies that often remain underexplored by the market. Small-cap mutual funds are currently in the spotlight, having delivered remarkable returns to investors over the past few years. These funds consistently provide investors with impressive double-digit returns, even over a short time frame. Some of these funds that have managed to perform impressively over a continued period have been listed below.
SMALL CAP
| Nippon India Small Cap Fund | 30.38 |
| SBI Small Cap Fund | 27.95 |
DSP Small Cap Fund | 26.21 |
Kotak Small Cap Fund | 24.64 |
HDFC Small Cap Fund | 22.28 |
Sundaram Small Cap Fund | 22.34 |
Aditya Birla Sun Life Small cap Fund | 19.82 |
| Source: AMFI (As of October 16, 2023) |
Step into the world of thematic funds and you will realise how focusing on a particular sector or theme will help you reap maximum yields over a period. Though these funds are cyclical with some of these sectors being in hibernation for around five to seven years before giving investors the ultimate benefits of putting money in them.
Not all investors are willing to include these funds in their investment portfolios barring some willing to take the risk and ride the cycle of returns when that particular sector performs.
Thematic funds | 10-year returns (in %) |
| Franklin Build India Fund | 22.92 |
| Invesco India Infrastructure Fund | 22.23 |
| Kotak Infrastructure and Economic Reform Fund | 21.54 |
DSP Natural Resources and New Energy Fund | 20.06 |
DSP India T.I.G.E.R. Fund | 19.58 |
Nippon India Power & Infra Fund | 19.16 |
Taurus Infrastructure Fund | 18.57 |
| Source: AMFI (As of October 16, 2023) |
Mutual funds offer the potential to generate wealth, but it’s essential to go beyond mere investment in a single fund. Diversifying your funds across various investments can help mitigate risk and enhance the prospects for higher returns.
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